OECD Proposes New Global Crypto Tax Reporting Rules

Today, the Organization for Economic Co-operation and Development released a public consultation document revealing a new crypto tax reporting framework designed to overhaul how international tax authorities share tax information related to cryptocurrencies.

OECD Publishes Draft Crypto-Asset Reporting Framework

New proposals seek to incorporate cryptocurrencies into the international tax reporting regime.

Today, the Organization for Economic Co-operation and Development published a consultation document seeking input from global policymakers concerning its new crypto tax reporting framework. The new due diligence procedures proposed under the draft guidelines would require individuals and entities that as a business provide crypto custody and exchange services to “identify their customers” and provide the “aggregate values of the exchanges and transfers for such customers on an annual basis.”

The OECD is an intergovernmental economic organization with 38 member countries established to foster international cooperation on common problems. The organization developed the Crypto-Asset Reporting Framework at the request of the G20, some of whose members worried that cryptocurrencies could be “exploited to undermine existing international tax transparency initiatives,” including the Common Reporting Standard.

The framework seeks to create an international standard for collecting and automatically exchanging information regarding crypto-related transactions between crypto service providers and international tax authorities. Under the new rules, crypto service providers would have to collect extensive customer-identifying data and report tax information to the tax authorities of each of their customer’s resident jurisdictions.

Besides reporting crypto-to-crypto and crypto-to-fiat transactions, the OECD has also suggested in its draft framework that crypto services should report on “transfers of Crypto-Assets, which would allow tax authorities to identify and track unhosted wallets of crypto users. “In order to increase visibility on these [transfers to unhosted wallets], the CARF also allows tax authorities to opt-in to receive reporting on the list of external wallet addresses,” the document reads.

Besides centralized cryptocurrency exchanges, the OECD’s definition for “crypto-asset service providers” includes other intermediaries providing exchange services, including brokers, dealers, and operators of crypto ATMs.

Finally, the OECD has proposed amendments to the Common Reporting Standard—a standard for the automatic exchange of information between international tax authorities to fight tax evasion—to incorporate central bank digital currencies and other digital representations of fiat currency under the standard.

The OECD has invited all interested parties to comment on the newly proposed crypto tax reporting rules by the end of April before finalizing the rules based on the feedback and updating the G20 in October.

Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.